Country Brief: Brazil

1. Country Brief: Brazil Saul Cunow POLI 134AA April 30, 2014

2. Brazil (Very) Basics • How many people live in Brazil? • How big (geographically) is Brazil? • How many countries in South America border Brazil? • What is the national language? • How big is the Brazilian economy?

3. What’s new in Brazil? • Brazil is much richer, more equal, and more stable politically than at anytime in its recent history (or ever?) • World Cup this summer!! • National elections in October • Summer Olympics in Rio in 2016

4. What’s not new in Brazil? • Poverty and inequality • Corruption at all levels of government • Political fragmentation • Popular discontent with elected officials

5. State of Democracy in Brazil • Brazil democratic progress mirrors progress in the region since the early 1990’s • Since impeachment of Collor in 1992, elections have been stable, regular, and fair • Democracy in Brazil has survived despite extreme inequality, violent cities, and poor living conditions for many Brazilians • In some areas (e.g. election technology), Brazil is among the most advanced in the world

6. Political Dynamics in Brazil • National dynamics are often not reflected at the local level • More than two dozen political parties in Congress • Presidential parties never have majorities so they rely on coalitions to govern • PT / PSDB = government / opposition cleavage • PMDB and others act as “fair weather fans” supporting whichever team will win presidency

7. Brazil Political Basics • Presidential system with bicameral legislature • (Sound familiar?) • National and state elections every four years • Municipal elections every four years • Very advanced electronic voting system • No exit polls or hanging chads!! • Presidents, governors, and mayors are powerful actors • Political parties not so powerful (in most cases) • More than 2 dozen parties represented in Congress

8. Electronic Voting in Brazil

9. Executive Elections • Presidential elections in Brazil are similar to in the U.S. • Few candidates • Parties matter > last 5 elections disputed by same two parties • Substantive campaigns • Plenty of negative campaigning (sound familiar?) • Some, but not too many crazy people (familiar?) • Runoff if no majority in first round • Two consecutive terms limit • Gubernatorial elections and mayoral elections are also similar • Runoffs except in municipalities with <200,000 inhabitants

10. Brazilian Senate • Senatorial elections are similar to in the U.S. • Substantive • A few prominent candidates in each race • 81 seats • 26+1 states x 3 seats • Plurality is used to select senators • Every 8 years voters cast votes for two senators • Currently 17 parties hold seats

11. Legislative Elections • Elections in the Chamber of Deputies are “the Wild West” • Very different from elections in the U.S. • Similar to elections in Ecuador, Colombia, Peru • Lots of candidates! • Deputado Estadual • Jeferson Camillo • Tiririca

12. Chamber of Deputies • Brazil’s lower house with 517 seats • Extremely malapportioned • 11 states with minimum 8 seats • Roraima 450,000 people/8 seats = 56,250 people per seat • São Paulo 42 million people/70 seats = 600,000 people per seat • Who benefits from this setup? • Deputies elected in statewide districts using open-list PR

13. How does OLPR work? • Voters cast vote for one candidate or party (most voters do not vote for party lists) • Voters for all candidates in each party (*or coalition) are added up • Parties are allocated seats proportional to vote share • Individual candidates’ vote totals determine their order on party lists and whether or not they are elected

14. Consequences of Brazil’s OLPR • Personalistic politics – candidates compete with their co-partisans for list position • Bacon! - Pork is an easy way for candidates to connect with voters and differentiate themselves • LOTS of parties and candidates • 60-80 in the least populous states • Over 1,000 in São Paulo and elsewhere • “Paradox of Choice” in elections • Many candidates means many good options • But choice-making becomes difficult

15. Lula • Like soccer players, Brazilian presidents are usually not referred to by their last names • LuizInácio “Lula” da Silva • Born in Pernambuco but raised in São Paulo state • Raised in a poor family with almost no education • He worked as a shoeshiner before moving on to steel and automobile factories • By the mid-1970’s he had become an important union leader in the ABCD region of São Paulo

16. Fourth Time’s a Charm • In 1980, Lula was a founding member of the Workers’ Party (more on them soon) • He was active in the campaign to end military rule (1964-1985) • Lula was elected to Congress in 1986 • He ran for president and lost in 1989, 1994, and 1998 • In 2002, he was elected president after adopting a more moderate image and rhetoric • Lula 80’s • Lula 2nd Term President (2009)

17. Lula’s Presidency • Lula’s election was transformational for many • (Imagine Obama x 10) • “One of the people” was elected president • This is rare in Latin America and Brazil • Triumph for the Workers’ Party and the left • Lula was reelected fairly easily in 2006 despite a serious corruption scandal

18. Lula’s Presidency • Once in office, Lula governed from the center • Continued many of the policies implemented by his predecessor, Fernando Henrique Cardoso (FHC) of the (now oppposition) PSDB • Orthodox fiscal and monetary policy • Markets and business elites were appeased by these moderate policies • The lower and working classes were thrilled • Militants in the PT were among the most displeased • FHC and the PSDB are “resentful” that Lula “gets all the credit” for these policies

19. Lula’s Accomplishments • Important accomplishments • Securing Olympic games and World Cup • Economic, political, and social stability • Significant reductions in poverty and inequality • Social programs • Fome Zero (Zero Hunger) • BolsaFamília (more on this in a minute)

20. Lula and the Mensalão Scandal • PT leaders made monthly payments to deputies to win their support for government legislation • “Dinheironacueca” (“Cash in the underwear”) • PT leadership felt it was “above politics” • PT leaders, deputies are now in jail including Lula’s Chief of Staff • “Teflon Don” president was largely unaffected

21. Lula’s 2nd Term Approval Ratings

22. BolsaFamília • Conditional Cash Transfer Program (CCT) • “Family stipend” started by FHC but expanded by Lula • Federal government provides poor families with direct financial transfers (debit cards) • Around $15 per child for families earning <US$55 a month • Why debit cards? • Money is conditional on certain behaviors • Children must attend school • Vaccinations • Program covers over 40 million people

23. BolsaFamília • Payments are given to female heads of household • Any ideas why? • Long term and short-term benefits • Like what? • Similar programs are in place across the world and Latin America • Bolsafamília is considered a model • Limited corruption/leakage

24. BolsaFamília Economic Impacts • Relatively cheap (0.5% of GDP) • Pensions represent ~13% of GDP in Brazil • Substantial reduction in (extreme) poverty • Especially rural poverty • Substantial reduction in inequality • Boosts demand in domestic market

25. Inequality in Brazil (Source: The Economist)

26. Poverty Reduction in Brazil (Source: The Economist)

27. BolsaFamília Political Impacts • Changed political landscape in Brazil • Workers’ Party (PT) support base has shifted from laborers and educated voters in Southeast to poorer, rural voters in Northeast • Traditional bastions of conservative political bosses and parties became Worker’s Party (PT) strongholds • Limited scholarly evidence of causality here • Lula is a big part of this story too

28. Lula -> Dilma

29. Dilma • DilmaRousseff was born in Minas Gerais to a Bulgarian father and Brazilian mother • During the military government she was active in Marxist-Leninist rebel groups • “Joan of Arc” of the guerrilla movement • She was arrested and tortured for weeks • After return to democracy she helped found the PDT • Dilma worked her way up the ladder to Minister of Energy to Lula’s Chief of Staff when José Dirceu resigned (mensalão scandal)

30. “The Chosen One” • Lula was termed out in 2010 • Prior to running for president, Dilma had never run for elected office • She ran a campaign based on continuity with Lula and his policies – he was present throughout • Dilma Campaign Ad 2010 • She defeated José Serra 56% to 44% in the 2nd round • Dilma is Brazil’s first female president • Wave of women in elected office in Latin America

31. Dilma’s First Two Years • Delivered promised continuity • Also sacked some ministers and others leftover from Lula’s administration • She was given credit rather than blamed for corruption scandals • Economic slowed and inflation increased • “Teflon Dona”?

32. Record Low Unemployment

33. Protests Break out in 2013 • Protests were sparked by increases in bus fares • Fare in São Paulo increased from R$3 to R$3.20 • Bus fares were a focal point but underlying complaints were more serious • Hundreds of thousands (if not millions) of people took to the streets across the country

34. What were the protests about? • Brazilians pay very high taxes but get low quality government services (including transportation) • Inflation • Brazil’s cities are among the most expensive in the world ($40 pizza) • Big mac index • Wages have not kept up • Mean salary is < US$700 a month • Federal minimum wage is US$325 a month (8 pizzas?) • The “bar has raised” – what will come next for the new middle classes? • Corruption • World Cup and Olympics (more on this in a minute)

35. Different types of protesters • Lower and middle class Brazilians • Largely peaceful • Upset with poor governance and social services • High costs of living • “Black blocs” • Hardcore anti-government protesters • Responsible for violent provocations • Vandalism and destruction of property

36. Dilma’s Plummeting Popularity • Dilma began her presidency at record highs for a first term president • Reelection in first round seemed certain • Now she’s in trouble…

38. Protests and the New Middle Class • What does it mean to be middle class in Latin America? Brazil? • Not the same thing it means in the U.S. • How are the demands of these middle classes different from the demands of the poor? • These protests will likely continue through the World Cup but not clear how widely

39. The World Cup • Brazil will host the 2014 World Cup this summer • 12 cities will host games • Why is a nation obsessed with soccer upset about the World Cup? • What are the political implications? • Brazil on the world stage (positive? risky?) • Substantial government investments • Real electoral consequences of the performance of the national team?

40. What World Cup Cities Need • Stadiums • Airports • Highways, buses, and subways • Hotel rooms • Is the World Cup good for economic growth?

41. World Cup Host Cities - São Paulo • Largest city in South America (20+ million people) • Brazil’s economic capital • At least 3 important soccer teams • New Itaquerão stadium • Estimated cost – R$820 million (US$360 million ) • Final cost – R$1 billion (US$450 million ) • Future home to Brazil’s 2nd most popular soccer team • Venue for opening match • Target ready date December 2013 • Actual ready date ??

42. World Cup Host Cities – Rio de Janeiro • Brazil’s most famous city • Almost 11 million people in the greater metropolitan area • Major soccer city • Most famous stadium – Maracanã • Attendance of 200,000 in 1950 World Cup!! • Estimated cost – R$705 million (US$315 million ) • Final cost - R$1.2 billion (US$540 million )

43. World Cup Host Cities - Manaus • Gateway city to the Amazon • Population 2 million • Local team plays in Brazil’s 4th division (think single-A baseball) • Average attendance for local team is less than 2,000 • New stadium capacity is 42,374 • Estimated cost – R$500 million (US$225 million) • Actual cost - R$670 million (US$300 million )

44. World Cup Infrastructure • Brazilian infrastructure has not kept pace with rapid growth and expanding middle class • Middle class people don’t want to take the bus! • Would have been hard to keep up • The Cup is an “excuse” for the government to invest in infrastructure. (Does the government need one?) • Are these the “right” investments? • Will they be ready in time?

45. Growth in Brazilian Air Traffic

46. Twitter pic of subway construction

47. World Cup “Takeaways” • Is the World Cup every a good investment? • Short-term costs outweigh benefits • How can we measure “downstream” benefits? • Cost overruns aren’t uniquely Brazilian (Sochi Olympics ~US$50 billion) • Not everyone can build like China • 2nd Avenue subway in NYC was planned in 1929 (still not built) • Most economists believe Brazil needs substantial investments in infrastructure • Could these happen without the cup? • What if the Brazilian government were performing better in other areas? • World Cup is a focal point for public discontent

48. Thank you! • Email me if you have any questions • scunow@ucsd.edu • Go visit Brazil! (maybe not during the Cup?)